DUBAI (Zawya Dow Jones)--The Dubai Financial Market's benchmark gauge closed sharply lower Thursday amid increasing signs a rally that had picked up momentum in recent weeks is losing steam.
Buying late in the day helped the market pare intraday losses, but it still closed the session 3.1% lower at 2014.09 as investors matched prices with current economic realities facing the emirate.
"This correction was always on the cards after the market added about 39% since early May to close at a seven-month high on Sunday," a Dubai-based trader pointed out.
The global stocks rally is now cooling and though oil is holding steady around $70 a barrel views are mixed about its current strength, the trader noted.
The Dubai market has lost more than 8.4% in the last four sessions and is expected to trade lower next week after breaking through some key support levels and a bunch of bad corporate news taking the shine of bellwether stocks.
"The music failed to restart and a market trend that was resembling musical chairs has now turned into snakes and ladders with the bottom of the snake looking like 1900 on the DFM," said Matthew Wakeman of EFG Hermes.
Dubai's woes this week were aggravated by real estate giant Emaar Properties PJSC's (EMAAR.DFM) stock price crashing amid confusion over its deal with Kingdom Holding Co. (4280.SA) to develop projects in Saudi Arabia.
Emaar's shares closed Thursday -4.8% at AED3.60, losing about 14% since Sunday, and investors are unlikely to be in a hurry to buy back in amid continued uncertainty over the health of Dubai real estate market.
"I would not be surprised to see a rotation of cash towards the Saudi market in the coming few sessions where the broader range of stocks offer more defensive plays than our markets here which are heavily weighted towards construction and real estate," EFG's Wakeman added.
To be sure, Dubai wasn't the only market to suffer.
Most Gulf markets closed in the red Thursday as investors booked recent gains. Doha's benchmark gauge lost 2.6% to take its week's total losses to about 10%.
"Looks like the 'summer drift' has set in and investors are now perhaps looking to be more patient/selective with their risk appetite," noted Ali Khan, director at Arqaam Capital.
Tellingly, institutional investors were net sellers on the Dubai market this week, according to data provided by the bourse.
By Nikhil Lohade
Source: ZAWYA DOW JONES
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